Contactless payment technology incorporates proximity communications between two devices to authenticate and enable payment for goods and services over the air (OTA) or without physical connection. Near Field Communication (NFC) is an example of a proximity communication option that can enable contactless payment technologies and that is supported by the Global System for Mobile Communications (GSM) Association. RFID is an example of a proximity communication method that can be adapted to enable NFC contactless payment technology. NFC communication ranges generally range from about 3 to about 4 inches. Such short communication distances limit, as well as, enable secure communication between close field proximity enabled devices. Proximity enabled contactless payment also can be implemented on Code Division Multiple Access (CDMA) devices with an embedded secure element within an NFC controller or a Re-usable Identification Module (R-UIM) type card.
In GSM phones, a proximity enabled (for example, NFC) controller with an antenna is incorporated into the device with the secure contactless software applications located on a smart chip. The smart chip can be further incorporated into one of several exemplary phone components, including a standard Subscribed Identity Module (SIM) card, a separate Mobile Secure Digital Card (for example, a secure digital (SD) card with non-volatile memory, such as EEPROM), or an embedded chip for the payment module purposes. An NFC-enabled contactless payment device enables financial transactions, ticketing, secure authentication, and coupons among several services that are available to the device owner.
The NFC contactless payment device can function as a credit card to enable purchases at the point-of-sale (POS) or even via merchant websites, where in the later case a GSM phone can be used to secure bank information from an authenticating server called a trusted service manager (TSM). The bank information is used in a form entry for payments on a merchant website. The TSM hosts and controls all credit card information sent to or withdrawn from a trusted NFC enabled contactless payment device.
Card software applications can be identified by Application Identifiers (AIDs) and are typically stored within the secure element of the mobile device. AIDs may be standardized by the ISO 7816 specification and include between 5 and 16 bytes. The first five bytes collectively of the AID is called a Registered Identifier (RID), which typically identifies the card company—for example, MasterCard®, Discover®, or Visa®. The subsequent bytes may include the PIX or Proprietary application Identifier Extension, which can be used to identify such information as the application type, version, manufacturer, and other information. The secure element can exist within a removable smart chip, SD card, or embedded within a fixed chip on the mobile device. The secure element allows a wallet software application resident on the mobile device and accessible by the mobile device user to interact securely with certain functions within the secure element, while protecting a majority of the information stored within it. Further, a secure communication channel uses encryption methods for communication between the secure element and external device and software. The secure element on the smart card includes crypto processors for calculating crypto algorithms, memory controller units to manage the Read Only Memory (ROM), Ready Access Memory (RAM), and EEPROM flash memory within the smart card.